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Dashte Abbas is one of the fertile plains of the Ilam Province situated in the southwest of Iran, where water resources are scarce, and often the quality of water is not suitable for agricultural uses. To solve the problem of water scarcity, the Karkheh-Dashte Abbas inter-basin water transfer project started operation in 2008. The objective of this study was to investigate the effects of different agricultural water management scenarios on the environmental and economic conditions in the Dashte Abbas using the System Dynamics (SD) approach. The conceptual model was considered based on five sub-models, including water demand, water supply, environmental stresses, environment, and water economics. The evaluated water transfer scenarios were allocation of 160, 170, 180, 200 Million Cubic Meters (MCM) water transferred from the Karkheh Dam and 90, 80, 70, and 60 MCM annual groundwater withdrawal from the aquifer, respectively. The results showed that in all scenarios, water transfer increased groundwater level, decreased groundwater quality, reduced soil aeration and drainage, increased salinity of root zone and, consequently, reduced agricultural production in the plain. The results of the SD model demonstrate that the need for drainage is reduced with increasing groundwater consumption. The alternative cropping systems with higher water requirements, including forage crops and sugar beet, may be helpful to reduce drainage problems and to prevent construction of an underground drainage system. The results also confirmed that with the implementation of the first water allocation scenario (allocation of annual 160 MCM surface water transfer and annual 90 MCM of groundwater withdrawal) and cultivation of higher water requirement crops can reduce the rise in groundwater level and drainage problems. In these conditions, the water table remains almost constant at a depth of 10 meters. [ABSTRACT FROM AUTHOR]